Gunvor May Issue Bond, Plans New Oil Refineries, CEO Says

Jan. 24 (Bloomberg) -- Gunvor Group Ltd., the independent
energy trader, may sell as much as $500 million of bonds this
year and plans to build new refineries, according to its chief
executive officer and co-founder Torbjorn Tornqvist.

The company may issue five-year, dollar-denominated debt,
which it hopes will close in the second quarter, Tornqvist said
in an interview in Davos, Switzerland, where he is attending the
World Economic Forum.

“The market is good for this right now,” Tornqvist said,
referring to the bond. “We are actually planning to construct a
couple of refineries around the world and we are looking for
investment opportunities outside Russia as well.”

Tornqvist declined to say where the refineries would be
built. The company last year purchased plants in Ingolstadt,
Germany and Antwerp, Belgium from insolvent refiner Petroplus
Holdings AG.

Billionaires Gennady Timchenko and Tornqvist founded
Cyprus-registered Gunvor in 1999 to trade Russian oil. The
company, which has offices in Geneva and Singapore, is
diversifying its business beyond the commodity, the company’s
chief financial officer, Jerome Schurink, said in an interview
by phone from Geneva last month.

‘Early Stage’

“The bond process is all very early stage, and we have not
decided on the amount,” Seth Pietras, a Geneva-based spokesman
for Gunvor, said in an e-mailed statement, following the
interview with Tornqvist. “It will all largely be dependent on
the market conditions, which at this time appear favorable.”

Two leading banks will underwrite the bond, Tornqvist said,
without naming any.

The Gunvor CEO also said oil prices are being pulled in
both directions because of new supply from places such as the
U.S. and political tension in Middle Eastern and African
nations. Prices will drop if Iran resolves its differences with
Western countries over nuclear research, he said in the
interview. Brent crude was trading at about $112 a barrel in
London today.

Gunvor competes with oil companies and independent trading
companies from BP Plc to Vitol Group in buying and selling crude
and refined oil products. The privately held company has no
plans for an initial public offering, Tornqvist said. One of its
competitors, Glencore International Plc, sold shares to the
public in May 2011.

Russia’s Importance

The company’s trading volume rose 10 percent in 2012 versus
a year earlier, Pietras said in December. Russia is “the single
most important country in our activity from trading and
investment,” Tornqvist said in Switzerland today.

Crude and oil products from the country account for more
than 25 percent of Gunvor’s trading volume, Tornqvist said in
Moscow in September, the month when Gunvor lost a tender worth
about $12 billion from state-run OAO Rosneft. In October it
signed a one-year contract to export refined products from
several Rosneft refineries in Russia.

Tornqvist, who was born in Sweden in 1953, said Gunvor can
probably extract more value from refineries than bigger
organizations such as major oil companies, though any
investments need to be carefully selected.

“The problem in the refining sector has been
exaggerated,” he said. “It is true Europe still has an
overcapacity but also the refining industry in Europe is very
fragmented.”